Buy the rumor, sell the news

Kenny Polcari explains this strategy used by Wall Street traders to turn a profit based on potentially market-moving events or announcements.

Buy the rumor, sell the news is a market adage based on the belief that stock prices move in anticipation of rumors and rebound when profit taking occurs after the actual news is released. It's a risky tactic of stock trading based on just rumors or moving events. The investor, who stands to make a nice profit on their stocks, then dumps positions as the news is announced. Kenny Polcari explains.